John E. Pytte April 24, 2017

Credit scoreIf you're having trouble with debt, or aren't sure how much debt you're in, it's important to take a long look at it sooner rather than later. Rest assured, though, that there are multiple options to look into, and you won't be alone when you're trying to figure out your options.

What is Credit Counseling?

This option is for those that are having a particularly difficult time getting their debts taken care of, or for those that just want to make sure they are on track. A credit counselor will take a look at your financial information and help you make a plan to pay off your debt over time if you're having trouble. They will help you get a complete picture of all your assets, and then determine what counts as debt. After comparing the two, you get a very accurate picture of any deficit or surplus as a balance. They'll also look at credit histories and give advice on ways to improve a credit score, increase income, and decrease spending. It's important to note that a credit counselor won't be of much help if you don't give them all of the details. Although a good credit counselor is really good at asking all the right questions, being upfront and honest about bills, mortgages, income, and what other debts you're dealing with will help them come up with a good plan without any holes.

Debt Consolidation: What’s the Difference?

With debt consolidation, some or all of your debt is combined together into one loan resulting in one monthly payment rather than keeping track of multiple payments. This helps simplify things financially so you have an easier budget to deal with and the interest rate can be significantly lower than the amount of interest you were paying with multiple debts.

It may also give you the chance to lower the amount you owe, depending on what you can pay. Debt consolidators will reduce the amount you owe if you're able to make a lump sum payment. They would rather get a lower amount of money than risk the possibility of not getting anything.

While debt counseling and debt consolidation can be similar, the former is merely looking over your finances and making a possible plan. It may or may not include programs that combine all your debts into a favorable loan, but the counselor will try to lower your interest rates on each loan or credit card and try to get any late fees voided as well. However, you'll still be making monthly payments in multiple places. Both choices can and likely will impact your credit score.

How Much Does It Cost?

These counseling services should always be free. There should never be a percentage charge, and this is something important to look out for as some places do charge. However, if they're backed by the National Foundation for Credit Counseling (NFCC), they will offer free services, so be sure to check.

What You Need To Know

Before going to a credit counselor, there are a few things which you should be aware of. First, budget management services should be free. Understand the difference between this and debt management, so that when you're looking around you don't choose the wrong service. You can always say no to any plan that the counselor offers, as you are always in control of your financial choices. Also always ask how each option will affect your credit rating, as some might keep it from changing too much.

Do You Need Help?

There are a few ways to determine if it's time for you to consider seeing a credit counselor. If you are doing any of the following, it's an excellent opportunity to seek out a credit counselor:

Living paycheck to paycheckAlways getting harassing phone calls from debt collectorsConsidering bankruptcy and worrying about itNoticing increasing tension in your home and relationships because of money-related argumentsHiding bills from your spouseNot sure how much debt you have incurredMaxing out credit cards regularly, having them rejected when you try to use themUsing cash loans, payday loans, or dipping into your retirement.

At Georgia Debt Relief of Savannah, we have helped countless numbers of people solve their money issue. We can address all the legal and financial matters that you need to get yourself free from the crushing feeling of being in debt and struggling to pay them back. Call our friendly staff today.